New snowmobiles for the defense

Charlie Taylor

The head of the department’s warning: “Increased costs of hundreds of millions”

One of the Nordic region’s largest food companies, HK Scan, is tracking sharp and long-lasting price increases for meat on trade shelves. “My opinion is that the grocery trade also now understands the need for rapid and substantial price increases,” says Lars Appelqvist, Sweden manager at HK Scan.Published: 18 April 2022, 22:08After lying down still for many years, food inflation has begun to pick up in recent months. It will also be worse if one is to believe forecasts from the banks that track food inflation of over five percent by the summer. What is behind the development are higher costs for agriculture. For Finnish-owned HK Scan, which is the market leader in meat and charcuterie products in Sweden, this involves sharply increased costs for beef and pork. “The prices of these raw materials, which weigh heavily on us, have risen by around 25 percent. Since then, the prices of packaging, electricity and other inputs have risen just as much, not least due to the war in Ukraine. It is about increased costs of hundreds of millions for us that must be transferred to trade and consumers “, says Lars Appelqvist. HK Scan was formed when Finnish HK bought Swedish Scan in 2006. The company, which is listed on the Helsinki Stock Exchange, had sales equivalent to SEK 7.2 billion last year in Sweden. This makes HK Scan the third largest food company, after Arla and the fat manufacturer AAK. Just like the rest of the industry, HK Scan is in constant price negotiations with the grocery trade, which in Sweden is completely dominated by Ica, Axfood and Coop. It is usually pointed out that it is an oligopoly situation that has allowed them to put pressure on food companies and keep prices down. “They are tough negotiators but I see a change in their attitude right now where we have good dialogues with these chains who realize that the cost increases for the entire food chain are unsustainable without price increases”, says Lars Appelqvist who does not think the higher prices will be temporary but is here to stay. He believes that the situation is critical for Swedish meat farmers and that store prices are about their survival. “It is a long cycle and for us it is about securing the production of Swedish meat for several years to come. With today’s difficult conditions, there is a clear risk that meat farmers will reduce production or close down completely. That worries me. ”As Dagens industri wrote about, the cost increases for agriculture affect the entire food industry. But the meat industry is particularly hard hit because they compete with foreign meat where prices are clearly lower. Although Swedish consumers prefer Swedish meat, there is a limit to how large this price gap can be, before the grocery trade and consumers choose, for example, beef fillet from Ireland instead of Swedish beef fillet. ”How far this ‘rubber band’ can be stretched has been a key issue for the whole industry. My picture is that we were close to this border before the war in Ukraine. Now the difference between Swedish and foreign meat is somewhat smaller than it was then, but the situation is sensitive and difficult to assess. ”HK Scan has had problems with growth and profitability for several years. Last year, the Group grew by 2 percent and reported an operating margin of 1 percent. It was seen as a step in the right direction. Things are better in Sweden, growth last year landed at close to six percent and the profit margin is also higher than the Group as a whole. In Swedish In the slaughterhouse market, the company has a market share of around 30 percent. Thus, it is slightly smaller than the market leader KLS Ugglarps, which is owned by the Danish farmers’ cooperative Danish Crowns. But HK Scan is bigger overall because it also sells finished meat products under its own brand. Here, the company competes primarily with the grocery industry’s own brands. “Here, we have lost market share for several years. The trade has prioritized its own brands and has also been more on its toes and previously understood the value of Swedish labeling the meat. We have not been as fast but we have learned and last year we increased our market share, which was a great success for us. ”In addition to the craze for Swedish meat, there is a clear trend among consumers to buy more vegetarian meat substitutes. Last month, HK Scan therefore launched a number of such products as plant-based buns, minced meat and sausages. “It has not been completely obvious, many have said that we should not compete with our own products. But it is a way to adapt to consumers and use our value chain to sell more than just animal meat. ” Pontus Herin

Click to rate this post!
[Total: 0 Average: 0]
Next Post

How Kim Jong-un may have stolen BRL 3 billion in cryptocurrencies, but faces difficulty laundering this money

Kim Jong-un, ruler of North Korea. Photo: The Hill and DCI The Lazarus hacker group, linked to Kim Jong-un’s North Korean government, may be behind the theft of BRL 3 billion in Ethereum and USDC from Axie Infinity’s Ronin network, according to the United States. The Federal Bureau of Investigation […]
How Kim Jong-un may have stolen BRL 3 billion in cryptocurrencies, but faces difficulty laundering this money

Subscribe US Now